IMPORTANT POINT
Approach of the court u/s 8 should be to see whether its jurisdiction is ousted, and not whether it has jurisdiction.

JUDGMENT

KURIAN, J.:

Leave granted.

2. Once an application is duly filed in terms of Section 8 of The Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘Arbitration Act’) before the civil court, what should be the approach of the court, is the short question arising for consideration in this case.

3. In a suit for injunction filed by the respondent, the prayer made was to restrain the first and second defendant institutions and their men from illegally taking away from the possession of plaintiff or her employee, or interfering with the use and enjoyment of ambassador or causing damage to the car bearing registration number KL-11-AA-1473 in the ownership and possession of the plaintiff by way of a decree of injunction. The car was purchased on loan granted by the appellant.

4. Duly complying with the procedure under Section 8 of the Arbitration Act, the appellant filed an application bringing to the notice of the trial court that in view of the agreement for arbitration between the parties regarding resolution of the disputes, the court did not have jurisdiction to try the case and the parties were to be directed to the process of arbitration in terms of the agreement. The trial court, by order dated 21.06.2010, declined the relief holding that:

“… Even though clause 22 of the Ext.A1 agreement provides that of disputes should be referred to arbitration this will not prevent the plaintiff from approaching this court especiallywhen one of the parties to the agreement are trying to commit an act opposed to public policyand per se illegal. The arbitration clause in the agreement cannot be put forward as a shield when one of the parties to the agreement commit an act opposed to public policy. In such circumstances the plaintiff can seek protection under the common civil law. In this matter what the respondent alleged that the petitioners are trying to take forcible possession of the vehicle which is being run by her. Her relief sought for in the plaint is only against the illegal acts of the defendants. The apprehended acts of the plaintiff are against the public policy and per se illegal and hence this suit is maintainable. …”

5. The appellant pursued the matter before the High Court. By the impugned order dated 17.03.2014, it was held as follows:

“… Going by Section 8 of the Arbitration and Conciliation Act, I am of the opinion that mere inclusion of an arbitration clause in the agreement does not bar or cause to oust the jurisdiction of the civil court provided under Section 9 of the Code of Civil Procedure. The above view is further supported by Section 5 of the Arbitration and Conciliation Act, which says that “in the matters governed by first part of the Arbitration and Conciliation Act, no judicial authority shall intervene except where so provided in the first part”. It means that jurisdiction of the Civil Court is not completely ousted by Section 8 of the Arbitration and Conciliation Act. Section 5 of the Arbitration and Conciliation Act does not bar the exercise of general power of the civil court to grant interim relief including specific injunctive relief under Order XXXIX of the CPC and the Specific Relif Act. …”

6. Aggrieved, the appeal.

7. Heard the learned counsel appearing for the appellants.

None appeared for the respondent.

8. Two clauses of Annexure-P1-Loan Agreement between the parties, executed on 29.06.1997, are relevant for the consideration of the disputes. Clause 14.6 reads as follows:

“14.6. Notwithstanding anything contained in this Agreement, the Lender shall be entitled to repossess the hypothecated Asset, whether the entire Loan Amount has been recalled or not, whenever, in the absolute discretion of the Lender, there is likelihood of the dues of the Lender not being paid by the borrower and or/the Asset is likely to be transferred by the Borrower to defeat the security and or payment of the due any units of the Lender.”

9. Clause 22(a), as to the extent relevant, reads as follows:

“2